Extant work on long-term care (LTC) and its insurance has neglected an important fact: Benefits of LTC insurance as well as the amount of public subsidization of LTC differ between severe and mild dependency. The objective of this paper is to revisit earlier results regarding the link between LTC insurance and informal care considering different levels of dependency together. It first models the optimal levels of insurance and of informal care for mild and severe dependency. It shows that the effect of potential intergenerational moral hazard and the crowding out of LTC insurance by public subsidization depend on the severity of dependency. The effects of a change in the child opportunity cost and inheritance rate are also considered.